Highlights for FY2007

Kao Corporation

President and CEOMotoki Ozaki

April 23, 2008

2

These presentation materials are available on ourwebsite in PDF format:http://www.kao.co.jp/en/ir/analystmtg/index.html

These presentation materials contain forward-looking statements that are based on management's estimates, assumptions and projections as of April 23, 2008. Certain factors, which include, but are not limited to, the risks and uncertainty associated with the worldwide economy, competitive activity, and fluctuations in currency exchange and interest rates, could cause actual results to differ materially from expectations.

3

Agenda

Summary of FY2007

Growth Strategies

FY2008 Forecast

4

2006������Summary of FY2007Summary of FY2007

5

The Consumer Products business in Japan continued to perform strongly,driven by high-value-added products and strengthened sales capabilities.Increased sales, price adjustments of chemical products and cost reductionspartly offset the impact of higher raw material prices.

The Consumer Products business in Japan continued to perform strongly,driven by high-value-added products and strengthened sales capabilities.Increased sales, price adjustments of chemical products and cost reductionspartly offset the impact of higher raw material prices.

FY2007 Financial Overview

Net sales: +7.0%Operating income: ¥116.2 billion -3.8%

Ordinary income: ¥114.2 billion -5.0%Net income: ¥66.5 billion -5.6%

EBITDA: ¥209.6 billion -1.6%

¥1,318.5 billionYear-on-year

ROE: 11.7% -140 bpsNet income per share: ¥122.53 -5.3%

Cash dividends per share:Payout ratio:

+¥2¥5444.1%

Share repurchases: Approximately ¥30.0 billion

Shareholder returns

6

Growth StrategiesGrowth Strategies

7

Mid-term Growth Strategies

Profitable growth driven by high-value-added productsProfitable growth driven by high-value-added products

Accelerate growth in the Beauty Care and Human Health Care* businesses.

Further strengthen and develop Fabric and Home Care, a core business.

Further enhance the Chemical business globally and locally with distinctive products that meet customer needs.

*The scope of “Human Health Care” does not include pharmaceuticals.

8

Beauty Care Business

In premium hair care, Kao strengthened its number-one position* in the shampoo/conditioner market in Japan amid intensifying competition.Premium skin care sales grew as facial cleansers, makeup removers and body cleansers continued to be major sales growth drivers.DEW SUPERIOR and COFFRET D’OR from Kanebo Cosmetics made good starts toward becoming cosmetics mega brands. Kao Sofina made new proposals with the launches of SOFINA beauté aging skin care and the est makeup series.In ASEAN countries, Kao rolled out Bioré body cleansers. In Taiwan and Hong Kong, Kao introduced a new variant of the Asience hair care series.

FY2007 Topics

In premium hair care and premium skin care, Kao will revitalize brands by enhancing product lineups to strengthen its market position.In prestige cosmetics, Kao will nurture and strengthen new brands while promoting the creation of mega brands with annual sales of more than 10 billion yen.Kao will roll out the Asience hair care series in Shanghai, China and Bangkok, Thailand.

FY2008 Topics

* Source: SRI POS data

Proposals for total beautyProposals for total beauty

Segreta hair care products

Bioré Melting Liquid Makeup Remover andBioré U body cleansers

Improved Asience hair care series

SOFINA beautéskin care

9

Beauty Care Business: Kanebo Cosmetics

Net sales (Jan.-Dec.): ¥220+ billion (+4.5% year-on-year)[Reference] Feb.-Dec. FY2006: ¥200+ billion

Operating margin* (Jan.-Dec.): 8%+[Reference] Feb.-Dec. FY2006: approximately 11%

Kanebo Cosmetics promoted the creation of mega brands in Japan. Sales of prestige brands such as Impress skin care and LUNASOL makeup and self-selection brands such as EVITAskin care and KATE makeup were strong. New skin care brand DEW SUPERIOR and new integrated makeup brand COFFRET D’OR were launched in October and December, respectively. Achieved year-on-year sales growth in the flat Japanese market.Increase in number of outlets in China essentially in line with projections. Expansion of sales per shop is a focal issue.Complete renewal of a core skin care line of the super-prestige brand SENSAI in Europe and North America.Proactive investment in marketing was carried out globally.

FY2007 Topics

FY2008 TopicsForecast:Net sales (Apr.-Mar.): Approximately ¥230 billion (+4% year-on-year)Operating margin* (Apr.-Mar.): approximately 9%

Launches of CHICCA, a new prestige makeup brand for women in their late 50s and 60s, and BLANCHIR SUPERIOR, new whitening skin care counseling brand, in March and May, respectively. In China, Kanebo Cosmetics will endeavor to improve counseling skills in order to increase sales per shop.

SENSAI Cellular Performanceskin care

DEW SUPERIOR skin care

COFFRET D’OR makeup

Impress skin care

KATE makeup

* Operating margin before deduction of royalties

10

Beauty Care Business: Synergy at Kanebo Cosmetics

Sales expansion synergyAggressive investment to build strong brands resulted in the creation of four new cosmetics mega brands with annual sales of more than 10 billion yen (EVITA, RMK, LISSAGE, SENSAI) for a total of nine Kanebo Cosmetics mega brands.Collaboration with other Kao Group companies in sales promotion campaigns at sales channels such as drugstores and general merchandising stores in Japan.

Cost reduction synergyAchieved cost reductions of slightly more than 1 billion yen in such areas as media buying, production and procurement.

Collaboration on in-store social contribution activities for the "Million-Person Pink Ribbon Campaign" to promote breast cancer early-detection awareness built intra-group unity.

FY2007 Topics

FY2008 Topics

SENSAI skin care

RMK makeup

LISSAGE skin care

EVITA skin care

Sales expansion synergyAccelerate synergy with Kao Customer Marketing Co., Ltd. in sales activities to reinforce ability to make proposals to retailers and set up in-store displays and shelves.In the R&D field, use scientific seeds and technology of both Kao and KaneboCosmetics to develop differentiated products with competitive advantages.Continue to promote the creation of mega brands.

Cost reduction synergyIncrease distribution efficiency in Japan.Promote collaborative activities to enhance supply chain management with other Kao Group companies outside Japan.

11

Human Health Care Business

Success Medicated Shampoo with Double Conditioning Effects

Laurier Super Slim Guard sanitary napkins in Thailand

Megurism Steam Eye Mask

Econa Healthy Cooking Oil Plus

FY2007 Topics

Expand sales of Econa healthy cooking oils and Healthya functional drinks by increasing loyal users helped by the new regulations on specific health examinations and guidance coming into effect in April 2008.Further enhance brand value of Merries baby diapers with the introduction of improved products with higher added value of gentleness on the skin.Strengthen and nurture product categories related to blood circulation enhancement.

FY2008 Topics

Develop and launch daily health care products.Develop and launch daily health care products.

In food & beverages, sales of the Econa Healthy Cooking Oil series were flat year-on-year. Main issue for Healthya functional drinks is a declining number of loyal users.Sales of Merries baby diapers continued to expand as consumers recognized the brand’s value due to improvements in breathability and other factors.Laurier F sanitary napkins continued to perform well in Japan and were rolled out in Singapore and Hong Kong. Laurier Super Slim Guard sanitary napkins drove strong sales in Thailand and China.In personal health, Kao launched Megurism Steam Eye Mask. Oral care, bath additives and men’s products contributed to sales growth.

12

Fabric and Home Care Business

(Left) Attack Soft Plus laundry detergent in Thailand(Right) Attack Easy laundry detergent in Indonesia

Resesh Antiseptic EX fabric freshener

Launches of the new Style Fit laundry detergent/fabric softener brand in response to the lifestyles of young people, and Attack Biogel laundry detergent in response to the popularity of water-saving type washing machines.In Indonesia, Kao launched Attack Easy laundry detergent, which was successful in Thailand. Attack expanded its product lineup in Thailand with the launch of Attack Soft Plus.In home care, Resesh Antiseptic EX fabric freshener and Quickle Wiper Handy household duster kit, which meet growing consumer needs for cleanliness, contributed to increased sales.

FY2007 Topics

Further strengthen Kao’s leading position in Japan’s laundry detergent market and aim for further sales growth in Asia by expanding its product lineup to meet diverse laundry needs such as advances in washing machines and doing laundry at night in Japan, as well as adding a softening effect in Asia.Create mega brands and refresh existing brands in the home care category by promoting development of high-value-added products in response to growing consumer consciousness of sanitation and antibacterial cleaning.

FY2008 Topics

Proposals to offer pleasure and comfort for household choresProposals to offer pleasure and comfort for household chores

Style Fit laundry detergent/fabric softener

Attack Biogel laundry detergent

13

Chemical Business

Amid increasing Asian demand for fatty alcohols in tandem with economic growth, expanded production capacity in the Philippines contributed to sales volume growth.Momentum continued in North America and Europe due to timely capital investment in production facilities for tertiary amines, toner and toner binder for copiers and printers, and other products.Due to a hike in raw material prices, Kao carried out price adjustments for chemical products such as fatty alcohols and performance chemicals globally.

FY2007 Topics

High-value-added specialty chemicals are an area of focus. Kao will expand sales by offering customized products in rapidly growing industries and responding quickly to customers’ needs.Oleo chemicals will continue responding to higher raw material prices for natural fats and oils and petrochemicals through various means such as price adjustments, high-value-added product development and speedy new product launches.Kao will further strengthen performance chemicals through increased functionality and low-cost operations.

FY2008 Topics

Further enhance the Chemical business globally and locally with distinctive products that meet customer needs.Further enhance the Chemical business globally and locally with distinctive products that meet customer needs.

Fatty alcohol production facilities in the Philippines

Performance chemicals

Toner and toner binder for copiers and printers

14

Consumer Products Business in Asia*

The new Asience hair care series on a store shelf in Hong Kong

Consumer-driven, value-added product development suitable for each country and accelerated product launches.

Asience Moisture Balance shampoo/conditioner was launched in Taiwan and Hong Kong, while Kao introduced the Asience hair care series in Singapore.The new body cleanser series Bioré Shower Cream (Body Foam) was launched in Indonesia, Thailand, Malaysia and Vietnam.Laurier Super Slim Guard sanitary napkins contributed to sales growth throughout the region with the expansion of the product line and renewed packages.Kao launched new laundry detergents Attack Softener-in in China and Attack Easy in Indonesia.

Defined roles for each country and standardized work processes.

FY2007 Topics

Continue to develop pan-Asian brands.Rollout of Asience hair care series in Shanghai, China and Bangkok, Thailand.Reinforce brand power of Bioré with product line expansion and improvements for facial cleansers.Strengthen Laurier brand by promoting Slim Guard aggressively in Greater China.Scale up sales of Attack laundry detergent and expand its sales area by enhancing its lineup with products with softening agents, color-aid agents, etc.

FY2008 Topics

Expand sales substantially and improve profitabilityby integrating business operations in Asia,including Japan.

Expand sales substantially and improve profitabilityby integrating business operations in Asia,including Japan.

Laurier Super Slim Guard sanitary napkins in China

*Excludes prestige cosmetics.

Bioré Shower Cream (Body Foam) body cleansers in Indonesia

(Left) Attack Softener-in laundry detergent in China(Right) Attack Easy laundry detergent in Indonesia

15

2. Steady and continuous cash dividends, aimingfor a consolidated payout ratio at the 40% level

2. Steady and continuous cash dividends, aimingfor a consolidated payout ratio at the 40% level

Use annual free cash flow of approximately ¥100 billion effectively from EVA standpoint toward further growth.Use annual free cash flow of approximately ¥100 billion effectively from EVA standpoint toward further growth.

Use of Increased Free Cash Flow*

*Free cash flow = Net cash provided by operating activities + Net cash used in investing activities

1. Capital expenditures and M&A for future growth1. Capital expenditures and M&A for future growth

3. Share repurchases and repayment of interest-bearingdebt including borrowings

3. Share repurchases and repayment of interest-bearingdebt including borrowings

Cash dividends per share: ¥5418th consecutive year of increase in cash dividends (planned)Payout ratio: 44.1%Payments of cash dividends: ¥29.6 billion

Share repurchases: ¥30 billionRepayment of long-term debt: ¥42 billion

FY2007

FY2007

16

FY2008 ForecastFY2008 Forecast

17

1. Enhance product value by promoting development of high-value-added products, mainly in categories affected by rising raw material prices.

2. Speed up high-value-added product development and reinforce sales capabilities globally.

3. Maintain strong growth of Consumer Products business in Asia by integrating business operations in the region, including Japan.

4. Total Cost Reduction (TCR) activities: Approximately +¥8.0 billion5. Continuous shareholder returns

1. Enhance product value by promoting development of high-value-added products, mainly in categories affected by rising raw material prices.

2. Speed up high-value-added product development and reinforce sales capabilities globally.

3. Maintain strong growth of Consumer Products business in Asia by integrating business operations in the region, including Japan.

4. Total Cost Reduction (TCR) activities: Approximately +¥8.0 billion5. Continuous shareholder returns

Principal strategies

Issues for FY2008

1. Impact of higher raw material prices*1: Approximately -¥24.0 billion2. Impact of currency translation on sales: Approximately -¥14.0 billion3. Sales prices of existing products in Consumer Products business*2 in Japan

will remain essentially flat

1. Impact of higher raw material prices*1: Approximately -¥24.0 billion2. Impact of currency translation on sales: Approximately -¥14.0 billion3. Sales prices of existing products in Consumer Products business*2 in Japan

will remain essentially flat

External factors affecting sales and profits

*1: Includes impact of foreign exchange.*2: Excludes prestige cosmetics.

18

Aim to return to an upward trend in profits with high-value-addedproducts and cost reduction activities amid uncertainty in theglobal economic outlook and raw material price trends.

Aim to return to an upward trend in profits with high-value-addedproducts and cost reduction activities amid uncertainty in theglobal economic outlook and raw material price trends.

FY2008 Forecast

Net sales: +0.9%Operating income: ¥117.0 billion +0.6%Ordinary income: ¥115.0 billion +0.7%

Net income: ¥69.0 billion +3.7%EBITDA: ¥206.0 billion -1.8%

ROE**: 11.6% -10 bps

¥1,330.0 billion

Net income per share**: ¥128.70 -5.0%

Year-on-year

Cash dividends per share:

Payout ratio:+¥2¥56

43.5%

19

AppendicesAppendices

20

Fabric and Home Care FY2007 sales: ¥274.6 billion

ChemicalFY2007 sales: ¥258.6 billion

Beauty CareFY2007 sales: ¥627.9 billion

Human Health CareFY2007 sales: ¥191.2 billion

Business Segments and Main Product Categories

Consumerdriven

Consumerdriven

Laundry detergents and fabric treatmentsProducts for kitchen, bath, toilet and living room care

Oleo chemicalsPerformance chemicalsSpecialty chemicals

* Sales include intersegment sales. Share of net sales is calculated based on sales to customers.

Beauty salon productsPrestige cosmeticsPremium skin carePremium hair care

Functional food and beveragesOral careBlood circulation enhancement products(incl. bath additives and thermal pads )Sanitary products

Consum

er Products B

usinessC

hemical B

usiness

Consum

er Products B

usiness

[+7.5% year-on-year / Share of net sales: 47.7%] [+4.2% year-on-year / Share of net sales: 14.5%]

[+1.9% year-on-year / Share of net sales: 20.8%] [+15.7% year-on-year / Share of net sales: 17.0%]

Consum

er Products B

usiness

21

Kao’s Cosmetics Mega Brands

Cosmetics Mega Brands(annual sales

more than 10 billion yen)in FY2007